In many cases businesses have to rely on credit to survive. This is why when credit is denied — or suddenly taken away — a business can end up in a tough financial situation unable to continue to operate the same way.
This appears to be the reason why Jacksonville, Florida-based FitzLORD Inc., which operates under the name Vulcan Steel, filed for Chapter 11 bankruptcy. According to court documents, even though the business was continuing to be successful and was paying creditors on time, American Express still cut off the company’s credit.
At this time, there is no word on why American Express cut off credit to the company.
After being cut off from American Express, this essentially forced the company into Chapter 11 bankruptcy.
Since filing for bankruptcy, a judge has signed off on an order that allows the company to continue to operate.
According to the Chapter 11 bankruptcy filing, the company has $1.98 million in assets and $2.15 million in liabilities.
In this case, the company also appears to still be plenty profitable. In 2011 Vulcan Steel reported $3.5 million in revenue. So far for 2012 there has been $2.15 million in revenue.
In general, with Chapter 11 bankruptcy a business comes up with a new plan to reorganize debts. This plan must be approved by creditors before it is put into play. In some cases, without approval, this can result in the business coming up with a new plan or the court forcing the creditors to accept the plan.
Source: Daily Record, “Vulcan Steel files Chapter 11,” Mark Basch, Dec. 10, 2012
- Chapter 11 is a complex process. An attorney with experience handling these types of bankruptcy cases should be consulted. To learn more about how our firm handles these cases, visit our Orlando Chapter 11 bankruptcy page.